The non-fungible token (NFT) frenzy hit a high mark this week when a piece of digital artwork sold for $69.3 million at auction, but beyond it's hard to argue it's madness when prices for just about every else are soaring, too. So writes Jeff Dorman, chief investment officer at Arca, a cryptocurrency investment management firm, in his newsletter this week.
"Many investors are so concerned about inflation that they will invest in just about anything to eliminate holding cash on their balance sheets," Dorman wrote. "When investors become too scared to hold cash even for a short period of time, you know the world isn’t quite as it used to be."
And the reach for yield could attract investor interest beyond just art and collectibles.
- From an investment standpoint, companies and projects that facilitate the growth and trading of NFTs could be big winners, according to Dorman.
- Tokens affiliated with NFT businesses have gained an average of 46% last week, and have now increased an average of 787% year to date, according to data from Messari.
- In-game assets (swords, skins or characters) can turn into NFTs, allowing players to have ownership whether they continue to play the game or not.
- “Essentially, NFTs begin to quantify the time spent on playing games into equity,” says Dorman.
So $69 million could end up being a mere pixel in a billion-dollar industry for digital assets.
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